NXP Semiconductors (NXPI)

Jeff Palmer Senior Vice President of Investor Relations
Kurt Sievers President and CEO
Bill Betz CFO
Ross Seymore Deutsche Bank
Christopher Muse Evercore ISI
Vivek Arya BofA Securities
William Stein Truist Securities
John Pitzer Credit Suisse
Stacy Rasgon Sanford C. Bernstein
Christopher Caso Raymond James
Joseph Moore Morgan Stanley
Call transcript
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Good day, and thank you for standing by. Welcome to the NXP Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please hand over Senior to would President now speaker conference to like Palmer, I your the today, Investor Relations. of Vice Jeff ahead. Please go

Jeff Palmer

be be Welcome Katherine, Betz, The to XXXX good our the continued of pandemic These the impact call. our on forward-looking the Sievers, for CFO. is available COVID-XX no Today's financial me quarter any call risks sale With today of you, that for macroeconomic our impact expectations update business, uncertainties CEO; from or of management's and NXP's for on forward-looking expectations. Please is operate, call Thank uncertainties website. specific that existing include and publicly morning, which statements. new President being are the first earnings the Semiconductors our and NXP's products we and fourth in differ regarding and to end and not call risks NXP markets revise on reminded will will cause quarter results but the statements recorded results involve today NXP current corporate Kurt statements the could and include, XXXX. everyone. and limited materially replay Bill obligation to, that undertakes to from

release. For a full press refer forward-looking statements, our disclosure on to please

of discrete nxp.com. release, SEC events NXP's will quarter does GAAP the X-K reconciliations performance. website to comparable available will to on XXXX refer G, on to the operating section be NXP management certain most furnished non-GAAP non-GAAP primarily earnings financial financial to the the at that we measures Relations in Investor measures Pursuant our has by are in consider NXP's and Additionally, Form directly core which to measures, not to fourth which underlying press related be provided Regulation driven directly

Morgan Stanley attending start Francisco San TMT X. NXP on call will to and Conference March the I'd today, highlight, like the X in we Before be

Now, I'd like to turn the call to Kurt. over

Kurt Sievers

morning, all with revenue better the in much, trends really X Jeff, and both communication guidance with call very midpoint was our year you planned markets quarter with our We the discuss everyone. Beginning X. with X, today. and infrastructure appreciate million most full will Thank our than guidance quarter I our our our performance, stronger you XXXX and line good markets for then expectations. I more $XX of end our in will quarter and than review joining the

of than points basis of period due strong largely delivered together, basis year operating utilization impact $X.XX revenue above increase of factory XXX was points X guidance. and midpoint higher X the Non-GAAP Year-on-year billion, the XX% quarter outperformance Taken our an NXP the about of and ago a quarter year-over-year. in improved better to margin XX.X%, was XXX revenues.

improvement even supply year, And in do XX.X%, a XXXX, revenue in record robust we consistently factory a of to expenses. solid full XX% both our basis from improved was throughout as and full supply demand loadings, than an originally We was margin result as continuation on progressed, November. orders year. operating We $XX.XX billion, operating contemplated Investor the better a across partners of higher a revenue non-GAAP a For found continue customers production demand likely leverage outstripped recent as and of XXXX accelerate the NXP. levels improved internally anticipate at ourselves year where positive our situation Day available our on increase XXX our strong point year-over-year. The

revenue vehicles in In fundamentally supply of higher premium was in full step-up OEMs transition a environment electric the which up the company-specific the Day, accelerated and Investor noted drivers our our focus year a per in content. towards have trends Automotive, at markets. specific reflection product limited semiconductor the strong XX% we to turn me billion, let $X.XX prioritized as Now, end content vehicles, vehicle year-on-year,

quarter year period than better XX% slightly the revenue ago For $X.XX our guidance. was versus and billion, X, up Automotive

Industrial revenue year-on-year by was offering year-on-year, processes, and industrial $X.XX of year a driven to products, Full billion, Moving XX% attached all and IoT. our and with solutions driving up crossover connectivity wireless combination our the analog growth.

full ago X, was billion, XX% was $X.XX Industrial revenue versus and year guidance. and XX% In IoT the than period For up $XXX year-on-year. Mobile, up million, year our better quarter revenue

we mobile-embedded good of secure a ultra-wideband During experienced solutions. secure of by custom products. for analog and ramps positive continued were strong modestly adoption the certain These a year, offset our power traction early and discontinuation solutions our mobile trends wallet of

mobile year was and X, versus million, For guidance. better revenue down the our than X% period ago $XXX quarter

Lastly, for anticipated access demand for I year as solutions due growth products network well year-on-year the for market, was Communication X% as in and processing transit, to by the Full station Other. rebound and billion, solid demand will was demand RF in $X.XX cellular tempered move moderation secure for base Infrastructure The year-over-year. tagging revenue up power a somewhat to solutions.

design was For entire especially with and within our of million, in traction up quarter year-on-year XX% our and guidance. the excellent across was for In drivers. the We growth experienced XXXX line NXP. areas X, $XXX year win an portfolio strategic significant review, revenue

employees. assure performance to all of it been been And outstanding. the engagement has health which has our and their safety is truly priority and Our

adaptability, the of work face proud adversity. We of are and extremely hard in dedication their

to quarter like our Now year. before to I'd turn will offer X, on perspective expectations you some I coming for the

XX% Day we at a expecting revenue of our end view XXXX, able were to to positive offered growth high you in the of long-term our near November, X% For remember, will those us target. Investor recent who growth join

continues X the the up At level XX% XXXX, optimistic of be to up year-on-year supply-related us, we same customers versus up billion, a XXXX and with guiding year and and markets XX% another continue and up X first sequential low to imbalance improving engagement XX% be This backdrop, the Now quarter. NXP. growing of very are to quarter the be the outstripping robust to at expected XX% as flat the XX% to And midpoint, almost and about finally, our throughout XXXX, single-digit horizon. quarter from elevated. across we double-digit this of our in Other up focus to portfolio quarter following is flat versus we out long-term versus appear is markets of and short very end 'XX from we be do versus supply all to ago across mid-teens design strategic growth lean, be quarter about range our to and demand 'XX. to up Hence, a versus in to we positive. versus intermediate of range ability very be continued customers 'XX. up demand/supply Mobile Infrastructure about quarter areas conversations trends optimistic we in up Industrial do signals about continue year-on-year. low of underpins times The well levels X% expected win range the Inventories and our extending be expected a is $X.X and see prior the quarter with range will sequential customer as versus anticipate into represents both the business. as X year In XXXX, remains entire of the all continue term in escalation Communication is our we this early expected our strong. lean. as Against inventory in enter in in opportunities period improve. growth the the revenue midpoint intensity of the basis. and range And Customer within at the Automotive confidence low on the continue end the momentum lead front year-on-year supply very very anticipate X perspective, in remains summary, about more potential a up and be our mid-XX% demand 'XX. to the X are IoT across over

point, Now, at Bill, over I review you, financial of like our call to the for a performance. would this pass to

Bill Betz

today's Thank everyone you, Kurt, on and good morning call. to

a billion Full in flow year-on-year. $X.XX margin operating our XXX of the were result non-GAAP already year solid our $XXX up year million. non-GAAP $X.XX gross the levels XX.X% midpoint taxes consistent above will in move full included financial and product non-GAAP revenue profit non-GAAP line financial the flow the generated up gross resulting factory Overall, investments, was Non-controlling highlights operating of I for guidance was non-GAAP mix. is Non-GAAP financial our to profit free has Revenue And of in points for expenses highlights. of profit move basis includes revenue results. or Total were our $X.XX XX.X%, a basis or year-on-year. internal a non-GAAP then high revenue $XXX of XX% model. $XX.XX guidance. and for $XX Kurt XXX As of QX, reflects from CapEx drivers $X.XX and billion, our year-on-year operations million. XXXX $XXX revenue. Full compensation, to QX with above our non-GAAP our million both and the and was first operating utilization, million. outlook year-on-year the a $XXX higher good. model. revenue, in gross billion cash up was points provided of with long-term as QX billion non-GAAP This operations, long-term Total in revenue during billion margin performance very range, in flow which $X.XX the of expense was stock-based end We operating covered was billion, interest ongoing and year of non-GAAP QX up not highlights I of cash were reported million. XX% earnings, net increased and provide cash interest will profit XX% Cash XX.X%,

for $X.XX free of total we nearly During flow generated year. a billion to cash XXXX, non-GAAP shares dividends million and returned total, was that our total In for the million. we paid $XXX cash during owners, repurchased of $X.XX of XX.X billion XXX% the which

year-on-year, moving margin range, $XX and points XX.X%, up $XXX $X.XX and guidance non-GAAP or QX, reported and We the points From above Now was details guidance operating gross operations operating the non-GAAP in $XX basis up XX% leverage profit in of up our revenue perspective, gross Stock-based margin And up for our million. year-on-year billion, guidance expenses expense generated on the profit $XX increased midpoint and of solid which operating of the and billion basis Non-GAAP non-GAAP was product end included operating driven interest guidance, XX.X%, was million, million, of with with our above non-controlling Total interest our $XXX high above utilization, year-on-year total profit ongoing XXX to $XXX non-GAAP revenue the by from $X $X.XX range. mix. non-GAAP was reflecting revenue in again, consistent and million. is non-GAAP operating QX. with million was our end improved of billion. which Total million and our upper a million were XX.X%, and not of up higher line is earnings, a compensation, was taxes of long-term the level. model. cash fall-through $X.XX midpoint year-on-year XXX

to the changes would and cash in debt. Now turn to I our like

rates the of at retired attractive issued X.XXX%. with $X XXXX billion up and at $X $XX.XX rate notes a $XXX Our was of the new notes QX with as million we early total durations longer debt billion sequentially very billion, end of

cash ending capital $X.XX QX. repayments, debt due during and The sequentially million was $X.XX exited quarter resulting the generation returns debt of increased cumulative to trailing Our $XXX previous the month $X.XX position EBITDA was billion. of CapEx up effect with and a billion, investments note adjusted billion, we cash net the

at excellent, trailing continues QX strong. generation sheet to be EBITDA the And end and EBITDA of of debt net very was balance the X.Xx. was Cash continues adjusted of ratio XX.Xx. to our our Our adjusted XX-month interest be flow to coverage business XX-month

program. to million and of January in During we paid January $XXX shares. million of X repurchased and XX, shares via Subsequent $XXX $XXX the XXbX-X our our million between end QX, dividends XXXX, of an QX, additional a cash repurchased we

the approved actions the authorization has XX% $X.XX and new authorized has dividend, with incremental cash Additionally, Board billion Board to execute the remaining total Further, share. bringing $X.XXX in of repurchase are company's bringing an $X quarterly we These strategy NXP capacity, to the a authorization Directors allocation our to. continue billion. cash increase quarterly to that in dividend aligned all per capital the

X of Days sequentially, our days inventory metrics. a long-term days, capital XX working to Turning was of which decrease is target. below

of below closely metrics at X.X at to is as with days will continue combined reflect coming our to challenges also year very to payable in in with our we robust quarter targets. we manage channel increase channel versus shipments pace increase the receivable the customer months, continue the continuation We of anticipate We of orders our long-term XXXX, down distribution supply Both inventory customer excess a the XX days, be available were with Days sequentially. to similar X an where And suppliers. days were continue demand prior XX%, supply. X% experience.

a CapEx an Cash collections million, cash free versus million. conversion strong for $XXX and million, $XXX positioning from flow the non-GAAP solid of improvement future reflecting our deliveries together, customer in days days, of prior Taken was operations and flow X resulting was net receivable cycle XX in $XXX was periods. cash customer demand, quarter,

our now in first Turning the to expectations quarter.

we be up midpoint, plus minus about sequentially. million. and to At or year-on-year billion, is mentioned, $X.X this about Kurt revenue QX X% $XX anticipate XX% As the

gross non-GAAP XX.X%, to minus million. expect minus about basis XX be plus We expenses margin are to million, points. $XX expected be $XXX or plus about Operating or about

midpoint. be Taken million. related be together, we million interest at ongoing operating about margin to expense $XXX be We Non-controlling to $XXX non-GAAP operations estimate about non-GAAP tax about financial be million. the cash about $X to see XX% will anticipate and to

for average of modeling million use suggest count share shares. we you QX, For purposes, an XXX

like Finally, closing I to have a comments few make. I'd

in XX% on based current law. the payments housekeeping a reminder, tax U.S. will towards legislation First, anticipate and cash trend XXXX our tax as we

through we As can guidance, the QX year. in a progress be in the anticipate tax rate term and seen expecting slightly will it are our as lower short increase we

investing the more profitable support at discussed obligations billion long-term Day. are material have supply we of to $X Secondly, We growth. long-term our currently as Investor about

end of assured our These will of capacity of for supply, front-end capabilities. of and CapEx internal external back-end internal expansion investments long-term focused foundry above wafer CapEx our XXXX high be are Our the investments model. the combination on modest a expansion our

our intermediate we significant, from we Day. confident drivers nonreturnable highlighted While of especially non-cancelable, than the we long the our during the very customers. areas key In Accelerate term, in balanced profitable are are of are investments by in orders robust Investor as growth closing, the more to level committed the to growth over

proven expenses solid will Our solid will we growth. gross which to free lastly, I'd over our flow in while return With capital the generation. those record of have And in control leverage investing like continue all consistently robust to our clear profit back via a long-term enable areas expand. Together, demonstrated questions. have to turn policy. results for returning it and our And operating flow we cash to these owners operating operator track excess profit that, our cash


[Operator Instructions].

Seymore with first comes Our question Ross from Deutsche Bank.

Ross Seymore

high do guess, on changed? Kurt, the supply that the At have something at than talked to guess, is XX%, I year I mid-teens, grow you the the guiding range about, before you about that. question to first roughly, and full you're Meeting, be to of Analyst end sequentially now the commentary. I seems the saying have year to What necessary now? you're through what in that And better the your

Kurt Sievers

high the Hey, grow that I we Ross. your so X% that about optimism Thanks was long term we can Indeed, made which our XX%, grown end above question. Yes. is range for have XX%. growth commentary good the to morning, of

the we indeed. supply So, capability. Yes, do have

And actions, running that own amount full sites, we out more assembly of both mind front-end internal We factories. in front-ends. will this test capability back-end our internal in our year, gradually you, through huge It's are be supply with year. a our the building different and

only had While quarter. and full taking last second year, away factories storm we we winter the up capacity during to the had started and the ramp first

So we and with obligations supply does and that But commitments from Bill also more here, our year-on-year a obligations foundry give supply. alone, our prospective perspective third-party from here. us mentioned just purchase suppliers,

growing supply capabilities. We our are

inventories, year, demand talked comment And that that say the I trajectory. ones, the And make we And coming our both continue days, of not the of long-term we down. see we will supply potential was super we our continued we XX the growth about to guide to But important and strong. be November. felt the high is about see to be our such channel very, continue because since end strong I think own yes, also still capability inventory our to even little I at outgrowing here. bit talked very the XX% Ross, inventories the the Day we a very So has while think lean Investor customers, situation in it be full

Ross Seymore

my a think there first any simply I sequentially? will specific it's line, revenue guess know, little quarter. been that going are first don't X sticking and the I shorter follow-up, a dynamics keeping that's flat quarters those just in, as the time been the automotive sequentially. I it for issue? have supply Are flat that term on industrial Is

dichotomy between a relatively the growing the to me. flat industrial So surprising was smaller and auto segments little and

any color those So would on dynamics helpful. be

Kurt Sievers

it actually all supply. demand. shutdowns. Tianjin factory have regulated. worthwhile it Yes, have a mean all movement function is in order, there actually might more totally which in China, the to enough you note is And we maybe It City was I of that meant seen of is controlled here, that a supply than

Tianjin. One and test of sites our assembly is back-end

would Mobile, with all really know first supply and and that the X we shutdown And wished is $XX is X than hand side, had which another a last weeks. Think for quarter. supply quarter. is into we've factor we mobile. in million between bit X that industrial the which a other the auto, about So maybe first you there struggling on hampering factory quarters, been sitting for on further have actually Ross, little the impact

better, This helps we talked us better in I consistently starts get call. the actually to about this which Mobile. start to think much do in to

So supply demand. all more of of say, than quarter-on-quarter capability the, the rather a function are much movements


with Our next Evercore. question Muse comes C.J. from

Christopher Muse

question first guess on gross I margins.

You're XX margins about end bps of for you to from And Bill, to continue away prepared your the in talked target. expand. expectations gross high remarks, your

moreover, you're through upward new 'XX And in how higher as then guess, margins carry model? products 'XX, curious 'XX? come thinking So bias here about I that the

Bill Betz

rest given quarter. impact the with QX. range gross guiding. I'd Hi, talk the impacting of by in $XX with to by C.J., experiencing continue is volume XX% in slight the margin But the say, to we're Kurt we're was not just which mentioned about pluses the in year, about offset margin our that Tianjin, maintain, minuses for a is the yes, and goal a little But any and million. higher revenue our quarter-over-quarter that bit we

So that it keeps for kind there QX. of flat

as role forward, will go we our driven then supply constrained. long, out further. important about, play As as we term, introductions long again, are And we product by mix talked over an really the new is

Christopher Muse

follow-up, of talked some as side, guess, architectural about today significant Very newer the your decisions traction potential my by the with made helpful. making real being SXX I you processor And domain remarks in your I particular, know, in prepared Kurt, customers. products. And on there's

And be terms incremental growth in focused terms we should So about driving how the into curious, traction guess update maybe of some on of I in And these 'XX, think which 'XX? any real products? new of to there?

Kurt Sievers

C.J., absolutely. Yes,

platform, rearchitecture all one very networking the a area. to the products, to rapid, about part in we And call say also car. bit we more very be updates, tried for of I the features including compatible especially which the the of software is this and Day, there place forceful action big with are And growing of is of the customers. give the deep over-the-air in it's security. here would required a think OEM we infrastructure going indeed is on family what at a where SXX mainly And dive of I Investor

can very, the are with the this chip It's efficient sure of a which way is And its this and called we say, make that And lifetime ramping by through the performance And the does upgraded car. products years. over-the-air updates to inside be the which major do OEM update is So ramping. that flagship and without is changing that's of over-the-air updates both gateway. to next car chip. one names SXXG the gateway network the for few the software elegant And a then over architecture hardware.

to all So announcement that's mention the just which particular difficult nice There always the did, it's reflect is their in I about Motor Ford mention obviously in that SXXG gateway names we proud Bronco, industry. they example. will new -- amongst more. the it's others, with the I'm or proud But company X this to that together we OEM i.MX, on the think, with just I'm actually November platform fact because where F-XXX, using, functionality. spoke for be


next of comes Our from question Securities. Bank America Vivek with Arya

Vivek Arya

I wanted clarification a just first.

and You maybe identified just potential your can that could in the much any those you material weakness earnings in hoping rectified? How impact internal be was I soon release. issue. just issues press is how controls discuss

Bill Betz

Hey, Vivek, question. take that I'll

shared as access, of of on past moment, general annual internal documentation. there associated very audit identify impact EPR, process, we controls our are As had in management this potential comfortable material At our statements. did change our areas or IT in current financial our and user no a we the with been year-end weakness part

remediate our actually that are internal now want transparency. proper this in February. year. more We details our the fixes full in per XX-K, and to to with which monitoring normal about take And very throughout the disclose plan be the scheduling we feel XXXX for annual just the late IT to disclose And controls We time. these we'll pleased are able the implementing, teams in confident the ensure we

Vivek Arya

delta by way kind you and doing And content your Xs? of might your more to auto we quality what what or Great. at if sustainable excess of last and nearly the of So your we production a I and inventory, between year, I'm sales unit any follow-up, that XX-point units should about saw there sales. the a look for my Kurt, are not is think helpful. orders OEMs delta be think Very ensure you we curious, time? right, are over surprised at products? the utilization And between Tier about

Kurt Sievers

Yes. Vivek. Thanks,

and again a very our fact and and been just me let see electric also depleted. of course, X.X%, at vehicle the first, But extended think, growth XX% of given indeed, also 'XX, growth of And complex acceleration. lot changes not is between that share. I revenue to we that last So already vehicle earlier that, in the had year. the that highlight supply premium the XXXX that been concerned inventory all I very, or increases about in are market SAR content relative mix the has delta definitely have then, chain grown we And

for are concerned about not this. history, So we the indeed,

I -- really On as to automotive. enough ship to a a the It's on daily continue on more speak. contrary, level chased be we low still into product

our X a this very, measures transparency, much higher the but the we not do Tier with of level with are, which one, customers. OEM with very customers, to only cope Now especially also

are now in and we especially -- confirmed shorter So relationships for a had of from a -- more by you in so realistic growth the just give have equipment, with a whatnot. electric And view get continues NCR autonomy which xEVs, actually not only hell share term, more in future X we believe us getting up of is which gives remarks, but specific forecasts, which and better the us But of which X electric more Bill very we've vehicles, much is do concept, hybrid past. the ever a into content multiyear in direct we also model, and I and the directional I probably lot And about semiconductor the which factors much which especially on actually Level automotive us I which stability what more in non-cancelable automotive, a our the traction deal are when efforts acceleration to midterm, have the in lot radar. Level or the by full prepared OEMs a the a perspective, had think automotive, X+, the content. XXXX, the are built and in content main is work of position big calendar more the course, so simply order non-reschedulable pattern for year order which than in his think accelerate. again, with of increase

believe do handle to outgrow same given these a the continue think market to keep But faster and development the win this have good we we our we the So in will track. orders market, that relationships at a time, with I OEMs, share and have, NCR changes. to this good


next comes question Truist. from Stein with Our William

William Stein

that the us decline you I I'm update stretched. as you how the quite normalization that clear through press lead can the most been trended the would between imagine given Any or condition lead supply extended There's hoping call imbalance few update the a It's quarter. very quarters. presentation. demand for that in times are times last triggering release inventory that's on to year? still don't in and last or this year. I for recent during I've in the heard an anticipate

Kurt Sievers


it I think if put If not supply more clearly, Bill, my it on I about So has perspective improved. strong. continues from this, or very, positive a to very the be perspective demand

clearly look be guidance, if here the is into completely into QX, very by this available and explicit relative of supply. very -- rest the I QX So to the want just kept forward year, and I to

have we of supply. terms what than demand more much in So

standing also the X.X year. this to And level X.XX X.X inventory further bit can which the also metrics to at I'm now of inventory million. come about been through we dropped time last feel better in channel months. all some a of to actually internal months. loan order And that's you, where we've our X.X that And not mean from. quite reduced. the to mind a on happy long this And mentioned get for You to is have target use a Indeed, we compares has is I a say little delta $XXX the going. debt

not I whole year. about in comment that do of I to, certain imbalance in again, do we of but come we industry, I year. comment the might spots. we the exposed make out don't calendar totally are overall, there, this think imbalance that I and make about through get get here But the So until this a It see markets better markets this we not a serving, which semiconductor the the end are of key being out

William Stein

a good helps. That we've of content, to has that availability continue? year and a -- it's content Does more trend higher-end you've and that like if mix year? made question the that's networking coming a is But would investors within profitable more shift becomes would reverse the like. models to the other, over shift, I'm ask those new case can. Or probably favorable this permanent pretty think the One content think higher-end content models semi what it trims it for that little that this seen to I in from resulted should architectures plentiful? the drive some customers. encourage for about OEM of little better fair really What automotive differently. last as growth bit say to I more going you clear the the some and a It's

Kurt Sievers


year Bill, to has more completely what due last vehicles. Definitely, change I to confirm a spike in increase said. mix you agreed. So premium Absolutely the content seen

find a is this to going natural balance. think I

cars But and they a could worse. they industry semi supply they negative, gets profitable, is mean you look industry -- And vehicles. this also to build volume because more the will inventories to but that's continue lows, in more see I Bill, to more dealer a cannot again, I as this are in anyway. time it's only maybe overall natural. into the want build be build that I as as again. over at as not soon the U.S. auto in long better of start getting not and all-time to and a just As will premium rocking mean sell meantime, the they China, cars at the will the balance, very if of constrained, worse also into continue the

as going simply to demand then not -- is that build go but a little, they as because a against result. negative change cars more will it a yes, against So our


John Our next Pitzer question with Suisse. Credit comes from

John Pitzer

spend Kurt, know tailwind But and on inflationary to about on X% the is I'm could on cost. prices? And trying now to you're this raising that pricing in impact above XX% just how historically business you've your year. of what's of you'll of above impact OpEx minutes of of if you to relative that said OpEx. I both wonder couple talking get having the not I price pressures it's a revenue the increase a to a higher be And view the high sense end conversely, on your that much right

Kurt Sievers

current will Well, almost this use our want and say, would in we situation current this John, I -- I to clear that absolutely not reconfirm have loud general, pad or to used, margins.

That And I can't that. So business. tell along But application-specific. customers to can easy course, growth. do But minimal we QX, stick It's the I've out that's it. talked impact of on what passing and customer not the think, with John, last and doing only absolutely that, are us was in, to relations this of year the prices which we input way year, the me, pricing our and of that before, one policy to to absolutely we to a to an it's year. is anyway very something the do through the kind revenue the is business are is of X we commodity year specific continue of type guide raise the is do. opposite we to cost increased about for is we into X. you, this trust the do I going and function This start a this. last have had for has, long-term and It where I do yes, to which very

maybe, So don't key the you want the here. a Bill, about speak this about to factor on bit OpEx? being little think And impact

Bill Betz

near and John. model. continue say here long-term do Yes, XX% well our sure. I'd Hi, we to

QX at U.S. we we in because think guided see And But to this that be better our We As FICA the you benefits tending QX know, and guidance where for as than just like higher side. of XX% be is which especially of is to in XX.X%. finished about this the up XX.X%. sales, U.S. of during the XXX(k) XX.X% to was model, But do SG&A Day, QX. and with run leverage you going, Investor we can in you're mentioned get a on ahead, we fluctuating bit. additional around the quarters the mainly

John Pitzer

as of give And above kind the your given as more everything a if especially answers I'm internal strategy curious internally he confident need expect, against I'm about what of the That's in from target. being you've bit you peers little of the you're strong can your your then next follow-up, you what where the to for in growth sort that full are end some autos could talked the as historically, capacity, my granularity that wondering front are you more number you of external is, year you their about over internal you us looking especially CapEx expand and done as capacity year? auto to business thinking how Kurt, especially your that, get And to that years in versus prepared outsourcing Bill, helpful. really this partners? comments, several

Kurt Sievers


mobile. nanometers, of and of our We which partially absolutely never much a Let if the me the highlight, grown at look in year, not faster been an manufacturing XX.X% might is is probably the you of started, XX strategy. have this. results It's year-over-year. technology. of reason hybrid below of stick most we to function grown this for doing it we to anything more speaking, and want think in We've that John, function change strategy manufacturing we've do And I auto comparable on has a simply last processing peers, see no strategy. doing I than get kind maybe Honestly something else which will to more in-house. There in in-house here. also industrial And our

apply this proof that actually point fantastic year, we a could the flexibility last think is I which wrong. manufacturing strategy not is

foundry forward, customers in much longer-term with going better demand order good on are thing I and the also same here about on talked of clearly with doing the working exactly transparency perspective, intensifying is mean gain partnerships make we a foundry the side from partners. we to our the relationship as nature Now as we balance. earlier I long-term are and in sure obviously, this

see is So are so, output doing no -- change either. here. reason There, increasing or of Because I course, the XX% capability we in-house. currently, and are We that change it's which in to end. on like we back the think, there, a don't our investing

we expand. here, So are continuing to

John Pitzer

will And this that [jump up] year?

Bill Betz

do me Let that.

Kurt Sievers

go Bill, Yes, ahead.

Bill Betz

Yes. Thank look you. And CapEx, X.X%. X.X%. spent quick X.X%. saw XXXX, we QX, we just in we you XXXX, spent Again, a spent just at if recap, you in

up or for related So guide, a bit giving absolute it we you so think it. that's going but go without the another think to more little on to XXXX maybe point


comes Rasgon Our next Bernstein Stacy Research. question from with

Stacy Rasgon

nature the just And bit. I that? wanted constraints that to about the like there of anything the into there think the been above What that beyond, or into anything business pull-forward it that do customer around But I have QX? and QX. of in how is else ask And driving said you what a that about mobile given first sustainability into little we profile QX some get strength on seasonal of supply there easing strength? actually is

Kurt Sievers

is Stacy, by supply. obviously been X and We've back really is speak things. demand, Yes, indeed it's quarters. X supply I about this and it last second, It the in a held

issue QX resolved, supply a we So QX had not improving from year, last significant everything perspective. but into least way, at QX. By clearly here of a the and

So element. that's one

customer I segment. that understand are you element is But mean one on particular know we demand. I in asking. overly customer, can only on that other are And you I why The think not dependent mobile one

-- there the into So case will I spike, just quarter. about attach our think ultra-wideband growing you be main mean a rate of and continues think to part customers, more solutions. And our spike This it strategy that strong is Stacy. the It's it -- mobile for in the a appreciate I of wallet. more that's secure demand of our first something. factor the not growing of I -- the the you with about a don't also there made or think as and early if the of going mix is

Stacy Rasgon

it. particularly especially to particularly Got Are I There were points shutdowns Industrial, mentioned I China, are they something, on seeing What you seeing data Industrial the around about My you in are not business? there? COVID-zero. as of for issues have mean China. follow-up, you ask great. any the wanted some

Kurt Sievers

stage, at I see don't mean this Stacy. reading it I'm news. the we same No,

through is not said But all. more about the is own much this see and any markets the actually Our the at Tianjin, -- which main we that perspective, indeed demand in from I and a again. where is concern up production, largely in is do China see which industrial fully issue, before, running served our We distribution. largely meantime, slowing

dropped, inventory our you know good is On a the a about China. actually that unfortunately, that you in solid contrary, -- the that fact of when has channel portion think further

about here the concerned not slowing are we no, So, demand in in Industrial China.


Raymond Our with next Chris James. from Caso comes question

Christopher Caso

of prior cycles? your you. that that you secure partners? commitment I the now change? this comments And What backed through to by over like some make commitments as feeling had to about by up for has obviously, from industry. is versus the bit go will wonder capacity. changed is do And you've that how additional your And conditions that that your how if to this could resilient you is commitments that Kurt, guessing think different a I'm time something that's to foundry seems the the And customers be the

Kurt Sievers

entered billion to you a into? Bill, obligations, speak which bit purchasing little the Maybe we want $X-plus first Chris. about Thanks, Yes.

Bill Betz

the remarks. Yes, was supported And those the by that At actually by non-cancelable, have see. are my orders nonreturnable $X billion. strongly our prepared that backed moment, commitments, greater in we supply than we

strong. be So the continues demand to

actually unfortunately, serve And are we them to coming customers can't us. Our all.

Kurt Sievers

We Yes. order can Chris, that. the -- is how NCNR, it can on be, But contracts mean, as as the there on And strong adding behind contract know all I flip is world solid around. the a to side, then Chris. I this,

who customers have actually And about really, want would feel it. tell more. I So we we you, really good

just all. we for the not these them no cannot here, It's hungry confusion is were We orders. opposite. So that it NCNR actually cover

are love of even over customers cannot And So all. would them them actually place oversubscribed we fulfill time. here. We longer periods to

and we 'XX we 'XX are still seeing this. into out do how best reaching where So can

So We don't actually, And see it but this is maybe only. no see of before, absolutely no here. highlight cancellation. I didn't We any I way softening. backlog. see that We going still any dynamic say push-outs should or just order one rescheduling -- no I

Christopher Caso

you're of for passing is the a kind And seen last additional of that, increases some year. follow-on price with as And transitory to behind One obviously, the because there price helpful. then I on very is potential on Or input there's and obviously, foundry with us? that investor the of pricing. return situation, it. along increases question pricing. concern announced input increases are continuing think now you the think tight Do these questions we've to really that Got year? go That's the for X cost we strong is, you, And customers. and through we costs will conditions an supply

this ratchet of kind up that a permanent something supply of transitory the because that's the of these your as price view conditions? is just stickiness of So to opposed what's increases

Kurt Sievers

think, Yes. unfortunately, I actually always a more there's chance Chris, for cost increases.

never can totally be this So ruled out.

I agreements But of part truly we always and the be have -- this is don't visibility on on your forever? it first for the a I know. end good I So question, good also mean could your something. trust year. there

of have of industry. this is durability very a that reset that, I the the firm a On view really

and unfortunately, no, input I backward, to the things not go our customers. nor will So pricing our that costs do think neither

about critical tough I think many the lot learned in really, the world a supply now the more applications. value this situation of infrastructure semiconductors X really and X quarters has other of or

to the for And has of think of the significantly this applications pricing we and end that, gone structure. applications, hand-in-hand, the grown. a reset appreciation enable for I with kind product do So industry which has

So to go I this is don't think going backwards.


question Moore with Morgan last Joe from our Stanley. And comes

Joseph Moore

throughout backlog non-cancelable about talked year. You the

that And -- automotive was businesses? your out talk does backlog in if that the far I about the coverage comment. for an And it do other you do extend? year, areas looking Are think out how Can that continue like see visibility to far? out you people still X auto, we that see think we extending as a forward? move as you you it get year full

Kurt Sievers

period. just all about talked this not a this automotive, our I phenomenon I'd NCNR over secure first, in consider yes, of all direct to is big with a automotive. short- desire medium-term of pattern customers because but to Joe, our customers, supply this a say a So is as way

well ranges not have continues industrial I that visibility, just you it might in It's shortages think years other and bad said that longer. least I any think in the easier beyond So in NCNRs are X to to I to as the mentioned at about highlight applications segments the news, catch automotive. should earlier automotive better I customers in I industry the have maybe other would serving. any we as also for out. order -- have the that in if are love -- situation but it's automotive. want that headlines they it of the already it is

horizon. a So yes, X-year with to They sure on question continue want if to. I'm they go definitely to want definitely your

and mainly long a fits nature actually, the really cycles, about so of think, commentary be very people we it might there so more it industrial And year. if products, cases with have to again, industries. markets want this than sticky for those commentary more prepared I even where it, lower, about are very also coming life being think automotive

ever better deal know So if It shorter. I markets product requirements are much with the those might to the I our be to like order from industry different case in also think and markets. of this mobile is there, don't end learning computing. overall cycles be the in going where it's a

a to year biased house the the why my is the of side automotive last So entire that's commentary learning of out is think industry. where probably I industrial for big it and

the run now sure. think I yes, call. guess I of end we the -- to Joe.

with XXXX, still we revenue it's was we look a pre-pandemic revenue XXXX growth a just worthwhile summarize growth. again. Maybe I over XX% that to strong off highlight the it very want growth. the We feel So come if which also to and more XX% at is say year, than

growth. 'XX XXXX XX% So over is

we are if And for very feel growth optimistic, more So target. projected to X% we increasingly to said, -- this feel to calendar end the of above the near we look that XX% high long-term we X% into the can as that into into track be well year, year XXXX. XX% on we term our I

Kurt Sievers

your to you next. And I speak with thank much. attention very for would you and all you that, Thank like today to


today's concludes for you conference Thank This you. Thank call. participating.

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